1JA  iVL 


The  Gold  Standard. 


HOW  IT  CAME  INTO  THE  WORLD  AND  WHY  IT  WILL  STAY. 
A  HISTORICAL  SKETCH  WITH  SOME  PRACTICAL 
REFLECTIONS  THEREON. 

AN  ADDRESS  BEFORE  THE  CONGRESS  OF  BANKERS  AND 
FINANCIERS  AT  CHICAGO,  JUNE  20,  1893. 


BY 

Horace  White. 


5*^ 


The  Evening  Post  Publishing  Co., 
NEW  YORK  CITY. 


Copies  of  this  pamphlet  may  be  obtained  at  j  cents  a  copy \ postpaid. 
Address  The  Evening  Post  Publishing  Company, 
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Avery  Architectural  and  Fine  Arts  Library 
Gift  of  Seymour  B.  Durst  Old  York  Library 


THE  GOLD  STANDARD. 


The  most  impressive  fact  in  the  world  of  finance  is 
the  dominance  of  the  gold  standard.  A  year  or  two 
ago  Roumania  passed  under  its  sway,  to-day  it  is 
Austria,  next  year  or  soon  it  will  be  India,  by  and 
by  it  will  be  Russia,  and  meanwhile  it  has  lost  no 
ground  that  it  has  ever  held.  Three  international 
conferences  have  been  assembled  to  stay  this  conquer- 
ing march,  while  none  has  been  called  to  promote  or 
assist  it.  Yet  the  movement  has  been  as  little  im- 
peded as  that  of  an  ocean  steamer  would  be  by  the 
action  of  a  debating  society  in  its  own  cabin.  Is  all 
this  due  to  human  perversity,  or  has  it  a  rational 
cause  founded  in  the  needs  of  mankind  ? 

THE  EXPERIENCE  OF  ENGLAND. 

The  first  nation  to  adopt  the  single  gold  standard 
by  law  was  England.  This  was  really  done  in  1798, 
although  the  date  usually  assigned  to  it  is  18 16.  • 

The  pound  sterling  was  originally  a  pound  weight 
of  silver,  divided  into  twenty  parts  called  shillings, 
and  each  of  these  into  twelve  parts  called  pennies,  or 
pennyweights.  Gold  made  its  first  appearance  in  the 
coinage  of  England  in  the  reign  of  Edward  III.  (A.  D. 
1345).  The  ratio  of  gold  to  silver  fixed  by  royal  de- 
cree in  this  coinage  was  about  12J  to  1. 

From  this  period  to  the  forty-third  year  of  the 
reign  of  Elizabeth  there  were  nine  debasements  of  the 
silver  coinage  accompanied  by  changes  in  the  gold 


4 


The  Gold  Standard. 


coinage,  but  as  these  were  arbitrary  acts  of  the  reign- 
ing sovereigns  they  possess  no  scientific  interest.  In 
the  forty-third  of  Elizabeth  (1601)  the  last  debasement 
was  made.  The  pound  weight  of  silver  was  then 
coined  into  sixty-two  shillings,  and  the  pound  of  gold 
into  thirty-three  and  one-half  sovereigns  of  seven 
pennyweights  and  four  grains  each,  the  ratio  of  gold 
to  silver  being  11  to  1.  The  silver  coinage  being 
henceforth  unchanged,  it  becomes  possible  to  trace 
the  commercial  variations  of  the  two  metals  and  to 
observe  the  ineffectual  struggles  of  society  and  gov- 
ernment to  keep  both  of  them  in  use  as  legal-tender 
money. 

Queen  Elizabeth  died  two  years  later.  Before  her 
successor,  James  L,  had  been  on  the  throne  three 
years,  gold  had  risen  in  value  as  compared  with  sil- 
ver, and  the  gold  coins  were  exported  to  such  an 
extent  that  it  was  necessary  to  diminish  their  weight 
about  11  per  cent.  The  ratio  now  established  was  a 
little  more  than  12  to  1. 

In  the  ninth  year  of  the  same  reign  the  gold  coin 
began  to  be  exported  again,  so  that  it  was  necessary 
to  make  a  new  change  of  ratio.  This  time  the  ratio 
was  fixed  at  13  to  1.  But  this  was  too  great  an  ad- 
vance in  the  rating  of  gold.  An  exportation  of  silver 
set  in  which  caused  great  inconvenience  in  the  king- 
dom. Instead  of  readjusting  the  ratio  the  King,  in 
the  year  1614,  issued  a  proclamation  prohibiting  the 
exportation  of  the  precious  metals.  The  proclamation 
had  no  effect.  So  another  one  was  issued  in  161 8  re- 
affirming the  first  one  and  forbidding  the  melting  of 
coin  for  the  purpose  of  making  plate,  although  a  cer- 
tain amount  might  be  used  for  repairing  old  plate  and 
keeping  it  up  to  its  original  standard.  As  the  evil 
continued  a  third  proclamation  was  issued  in  1622 


The  Gold  Standard. 


5 


and  a  fourth  in  1624.  None  of  these  had  any  effect 
except  to  make  an  historical  record  of  the  futility  of 
attempts  to  enforce  a  legal  ratio  which  is  different 
even  in  a  slight  degree  from  the  market  ratio.  It  was 
customary  during  this  period  to  pay  a  premium  of 
two  pence  for  silver  change  to  the  amount  of  20  shil- 
ings. 

Soon  after  Charles  I.  began  his  reign  he  issued  a 
proclamation  on  the  same  subject,  reciting  the  pre- 
vious ones  of  his  father  and  acknowledging  that  they 
had  been  disregarded.  In  1636  seven  persons  accused 
of  melting  and  exporting  coin  were  arrested  and  fined 
£8,500  and  imprisoned  till  the  fines  were  paid,  but 
even  this  example  did  not  put  a  stop  to  the  practice. 
Silver  was  worth  two  or  three  pence  per  ounce  more 
than  the  mint  valuation,  and  this  fact  dominated 
society  from  the  King  on  the  throne  to  the  beggar  on 
the  dunghill.  But  what  could  not  be  prevented  by 
royal  proclamation  and  star  chamber  was  stopped  by 
an  unseen  force.  The  price  of  gold  was  slowly  rising, 
so  that  about  the  beginning  of  the  Commonwealth 
the  ratio  that  King  James  had  established  was  identi- 
cal, or  nearly  so,  with  the  market  ratio.  The  exporta- 
tion of  the  precious  metals  ceased  until  the  reign  of 
Charles  IT. 

In  1663  gold  had  risen  in  value  so  that  it  was  neces- 
sary to  change  the  ratio  to  14J  to  1.  This  was  an 
advance  of  about  8  per  cent,  since  James  I. 

Each  time  that  a  change  was  made  in  the  gold 
coinage  a  new  name  was  given  to  the  coin  so  pro- 
duced, in  order  to  distinguish  it  from  its  predeces- 
sors. The  coin  that  Charles  II.  now  introduced  was 
called  the  guinea.  It  was  ordered  that  this  coin 
should  pass  for  twenty  shillings,  but  it  immediately 
became  current  in  trade  at  a  higher  rate,  passing  for 


6 


The  Gold  Standard. 


twenty-one  to  twenty-two  shillings.  No  attempt  was 
made  to  enforce  the  mint  valuation  or  to  prevent 
melting"  or  exporting.  Consequently  silver  became 
in  practice  the  only  legal-tender  money.  Nobody 
would  offer  a  guinea  to  pay  a  debt  of  20  shil- 
lings when  it  was  worth  21  shillings.  The  guineas 
passed  for  what  they  were  worth  as  bullion.  That 
was  a  time  when  the  clipping  of  coin  was  much 
practiced,  but  it  was  no  advantage  to  clip  a  gold 
coin,  since  it  was  taken  only  at  its  bullion  value. 
The  silver  coins,  however,  passed  by  tale.  Con- 
sequently they  alone  were  subjected  to  the  clip- 
ping process.  The  evil  became  so  great  that  a  re- 
coinage  of  silver  was  necessary  and  was  undertaken 
in  the  reign  of  William  III.  This  was  a  celebrated 
event  in  many  ways.  Both  Sir  Isaac  Newton  and 
John  Locke  were  concerned  in  it.  In  the  year  171 7 
the  guinea  was  made  current  by  royal  proclamation 
at  21  shillings  in  silver,  at  which  figure  the  ratio  was 
about  15!  to  1.  This  was  in  the  third  year  of  the 
reign  of  George  I. 

It  was  about  this  time,  says  Lord  Liverpool,  that  a 
marked  preference  was  shown  by  the  people  for  gold 
money  rather  than  silver,  on  account  of  its  convenience 
in  making  large  payments.  This  he  ascribes  to  the 
increase  in  the  commerce  of  the  country.  As  gold 
was  slightly  overrated  at  the  ratio  of  154-  to  1,  there 
was  a  tendency  to  export  silver.  Only  £584,000  of 
the  latter  metal  was  brought  to  the  mint  for  a  period 
of  eighty-three  years  down  to  the  end  of  the  century, 
and  most  of  this  came  from  Spanish  treasure  ships 
captured  in  war.  The  only  silver  coin  retained  in 
circulation  was  that  which  had  been  much  worn.  As 
these  light-weight  pieces  varied  among  themselves, 
the  lightest  ones  were  selected  to  make  payments,  a 


The  Gold  Standard.  7 

condition  which  became  worse  and  worse'  until  Par- 
liament in  1774  passed  an  act  limiting  the  legal  tender 
of  silver  coins  to  £25  in  tale.  For  any  sum  above  £25 
they  could  be  paid  by  weight  only.  This  act  was  to 
continue  in  force  only  two  years,  the  expectation  being 
that  some  other  remedy  for  the  evil  would  shortly  be 
found.  It  was  re-enacted  from  time  to  time  till  1798, 
when  another  clause  was  added  providing  that  no 
more  silver  should  be  coined  at  the  mint,  nor  should 
any  be  delivered  that  had  been  coined,  but  that  the 
owners  of  such  silver  should  be  paid  for  it.  In  the 
following  year  (1799)  a  brief  act  was  passed  making 
the  act  of  1774  perpetual.  In  18 16  the  character  of 
the  British  monetary  system  was  formulated  by  an  act 
of  Parliament  on  its  present  basis,  the  essential  part 
of  this  act  being  in  the  following  words : 

"  XI.  And  whereas  at  various  times  heretofore  the 
coins  of  this  realm  of  gold  and  silver  have  been  equally 
a  legal  tender  for  payments  to  any  amount,  and  great 
inconvenience  has  arisen  from  both  those  precious  metals 
being  concurrently  the  standard  measure  of  value  and 
equivalent  for  property ;  and  it  is  expedient  that  the 
gold  coin  made  according  to  the  indentures  of  the 
Mint  should  henceforth  be  the  sole  standard  measure 
of  value  and  legal  tender  for  payment,  without  any 
limitation  of  amount,  and  that  the  silver  coin  should 
be  a  legal  tender  to  a  limited  amount  only,  for  the 
facility  of  exchange  and  commerce  ; 

"  Be  it  therefore  enacted,  That  from  and  after  the 
passing  of  this  act,  the  gold  coin  of  this  realm  shall  be 
and  shall  be  considered  and  is  hereby  declared  to  be 
the  only  legal  tender  for  payments,  except  as  herein- 
after provided,  *  *  *  and  no  tender  of  payment 
of  money  made  in  the  silver  coin  of  this  realm  of  any 
sum  exceeding  the  sum  of  forty  shillings  at  any  one 
time  shall  be  reputed  a  tender  in  law,  etc." 


8 


The  Gold  Standard. 


This  is  a  brief  resume  of  the  experience  and  legis- 
lation of  Great  Britain.  It  is  important  as  showing 
that  the  single  gold  standard  was  adopted  on  account 
of  the  "  great  inconvenience  "  of  the  double  standard, 
which  had  been  in  vogue  previously.  Of  course,  this 
"  inconvenience  "  had  attracted  the  attention  of 
learned  men  before  1798.  John  Locke  had  shown 
that  a  double  standard  composed  of  two  things  of 
varying  value  was  an  impossibility.  He  favored  the 
single  standard  of  silver,  as  did  the  learned  men  who 
considered  the  same  question  in  France  a  century  later. 

It  appears  that  the  gold  standard  was  adopted 
without  any  particular  design  on  the  part  of  those 
who  brought  it  about.  They  found,  as  a  matter  of 
fact,  that  the  monetary  evils  existing  in  1774  could  be 
cured  most  readily  by  limiting  the  legal  tender  of 
silver.  So  they  did  it  for  two  years,  and  then  for 
two  years  more,  and  so  on,  till  1798-99,  when  they 
had  become  satisfied  by  the  experience  of  twenty-five 
years  that  the  single  gold  standard  was  the  right 
thing  to  put  an  end  to  the  "  inconvenience.''  Seven- 
teen years  later,  the  experiment  having  continued  to 
be  successful,  they  passed  the  law  which  I  have 
quoted.  That  law,  in  substance,  remains  in  force  to 
the  present  time,  and  we  may  be  sure  that  it  would 
not  have  lasted  so  long  if  it  were  not  a  good  thing 
per  se. 

THE  GOLD  STANDARD  IN  THE  UNITED 
STATES. 

We  will  next  consider  the  experience  of  the  United 
States.  At  the  beginning  of  our  career  as  a  nation 
we  adopted  the  double  standard  of  gold  and  silver. 
This  was  in  1792.  Our  statesmen  followed  in  this 
matter  the  example  of  the  older  countries  of  Europe. 


The  Gold  Standard. 


9 


Alexander  Hamilton  was  the  Secretary  of  the  Treas- 
ury and  the  ruling  spirit.  At  his  instance  the  ratio 
of  15  was  adopted,  and  there  is  no  room  to  doubt 
that  this  was  very  close  to  the  true  market  ratio  at 
the  time.  The  English  ratio  of  15  1-7  ceased  to  be 
operative,  as  we  have  seen,  because  it  was  too  high. 
France  was  at  that  time  under  the  regime  of  irre- 
deemable paper.  Consequently  nothing  could  be 
learned  from  her.  The  discussions  and  writings  of 
the  period  show  that  there  was  an  honest  and  earnest 
effort  to  adopt  the  market  ratio  as  the  legal  ratio,  and 
that  the  result  reached  was  as  nearly  true  as  possible. 
Nevertheless,  gold  began  to  grow  scarce  in  our  circu- 
lation as  early  as  18 10,  and  had  wholly  disappeared  in 
18 1 7.  One  ounce  of  gold  had  come  to  be  worth  as 
metal  something  more  than  fifteen  ounces  of  silver. 
It  was  worth  while  for  bullion  brokers  to  collect  gold 
coins  and  export  them.  The  testimony  is  emphatic 
and  is  not  disputed,  that  after  i8i7and  until  1834  our 
metallic  money  consisted  of  silver  exclusively. 

THE  LAW  OF  1834. 

In  1834  people  had  become  tired  of  lugging  silver 
around.  They  had  by  this  time  found  out  what  was 
the  matter.  They  determined  to  have  some  gold  in 
their  pockets,  but  it  cannot  be  affirmed  that  Congress 
had  reached  a  scientific  conclusion  in  favor  of  the 
single  gold  standard.  What  is  certain  is  that  Con- 
gress adopted  the  ratio  of  16  to  1  in  1834  by  very 
large  majorities  in  spite  of  proofs  urgently  presented 
that  this  ratio  would  drive  silver  out  of  circulation 
altogether,  as  it  did.  This  bill  was  called  the  "  Gold 
Bill  "  in  the  discussions  of  the  time.  As  reported  by 
the  special  committee,  it  provided  for  a  ratio  of  15.60 
to  1,  but  when  it  came  up  for  discussion,  Mr.  Camp- 


io  The  Gold  Standard. 

bell  P.  White,  the  Chairman  of  the  Committee,  who 
was  himself  in  favor  of  the  single  gold  standard, 
moved  to  amend  by  making  the  ratio  16  to  i,  and  his 
amendment  was  adopted  without  a  division.  On  the 
main  question  the  debate  was  long  and  animated. 
An  amendment  to  the  amendment  was  offered,  making 
the  ratio  15.625  to  1,  and  it  was  supported  on  the 
ground  that  this  was  the  true  market  ratio,  and  that 
it  would  enable  the  country  to  keep  both  silver  and 
gold  in  concurrent  circulation.  This  amendment 
was  voted  down — yeas  52,  nays  127.  The  bill  was 
then  passed  in  the  House  by  145  to  36,  and  in  the  Sen- 
ate by  35  to  7. 

There  was  a  variety  of  motives  leading  to  the  pas- 
sage of  the  Gold  Bill,  but  among  these  the  desire  of 
having  gold  in  place  of  silver  was  the  most  influential. 
Thomas  H.  Benton,  one  of  the  strongest  advocates  of 
the  measure,  declared  that  the  object  of  his  endeavors 
was : 

"  To  enable  the  friends  of  gold  to  go  to  work  at  the 
right  place  to  effect  the  recovery  of  that  precious  metal 
which  their  fathers  once  possessed,  which  the  subjects 
of  European  kings  now  possess,  which  the  citizens  of 
the  young  republics  to  the  south  all  possess,  which 
even  the  free  negroes  of  San  Domingo  possess,  but 
which  the  yeomanry  of  this  America  have  been  de- 
prived for  more  than  twenty  years,  and  will  be  de- 
prived forever  unless  they  discover  the  cause  of  the 
evil  and  apply  the  remedy  to  its  root. — [Speech  of 
Senator  Benton  of  Missouri,  quoted  by  Louis  R. 
Ehrich  in  his  '  Question  of  Silver.']" 

The  effect  that  was  predicted  was  abundantly 
realized.  Silver  did  go  out  of  circulation.  The 
minor  coins,  being  of  proportional  weight  and  fineness 
with  the  dollar,  were  melted  and  exported,  and  their 


The  Gold  Standard. 


i  i 


place  in  the  circulation  was  taken  by  light-weight 
foreign  coins,  principally  Spanish  and  Mexican  six- 
pences, shillings,  quarters,  and  halves.  Those  coins, 
when  of  full  weight,  were  almost  identical  with  our 
own  fractional  coins.  If  our  own  would  not  circulate 
the  foreign  ones  of  course  would  not.  But  if  there 
was  a  certain  proportion  of  these  coins,  whether 
foreign  or  domestic,  that  had  been  worn  down  by 
long  use  so  that  they  really  represented  the  market 
ratio  or  something  less,  such  coins  would  circulate 
concurrently  with  gold.  To  illustrate  :  two  halves, 
four  quarters,  or  ten  dimes,  if  new  and  of  full  weight, 
were  worth  about  one  cent  and  a  half  more  than  a 
gold  dollar.  Consequently  they  would  be  collected 
by  brokers,  melted  and  exported.  But  two  halves, 
four  quarters,  or  ten  dimes,  that  had  lost  one  and  a  half 
cents'  worth  of  silver  by  abrasion,  would  circulate,  be- 
cause there  would  be  no  motive  to  melt  or  export  them. 
There  would  be  no  profit  in  it.  When  I  was  a  boy 
the  silver  money  of  this  country  consisted  exclusively 
of  foreign  coins,  mostly  Spanish  and  Mexican,  but 
with  a  considerable  sprinkling  of  English,  French, 
German  and  Scandinavian  pieces.  Every  merchant 
kept  a  coin  chart  manual  for  handy  reference  to  deter- 
mine the  value  of  these  pieces  as  they  were  offered  in 
trade.  I  have  also  seen  Spanish  quarters  cut  in  half, 
each  piece  circulating  as  a  shilling.  There  was 
nothing  remarkable  about  this,  since  all  these  foreign 
coins  were  circulating  at  their  bullion  value.  The 
two  halves  of  a  Spanish  quarter  were  therefore  worth 
as  much  as  they  would  have  been  if  joined  in  a  single 
piece. 

It  became  apparent  to  everybody  that  if  full-weight 
silver  coins  would  not  circulate  on  the  ratio  of  16  to 
i,  while  those  of  light  weight  would  circulate,  then  it 


12 


The  Gold  Standard. 


would  be  safe  to  make  minor  coins  (halves,  quarters, 
etc.),  designedly  of  light  weight  on  Government  ac- 
count, of  limited  legal  tender.  There  would  be  no 
profit  in  exporting  such  coins,  because  they  would 
not  sell  as  bullion  for  as  much  as  it  would  cost  to  col- 
lect them.    In  1853  an  act  of  this  kind  was  passed. 

From  1837  onward  the  country  had  gold  money  and 
the  gold  basis.  Silver  dollars  were  hardly  ever  seen. 
There  was  not  an  hour  in  the  whole  period  of  forty 
years  to  1873  when  the  silver  dollar  was  not  worth 
more  than  the  gold  dollar.  With  the  exception  of  a 
very  few  years  it  was  worth  fully  three  cents  more. 
Did  any  of  you  ever  see  a  silver  dollar  in  circulation 
prior  to  1878?    I  never  did. 

THE  LAW  OF  1873. 

Under  these  circumstances,  the  gold  standard  exist- 
ing de  facto,  and  there  being  no  silver  except  light- 
weight subsidiary  coins,  our  mint  authorities,  the  only 
people  who  took  any  interest  in  the  subject,  began 
even  before  the  war  to  recommend  that  the  single 
gold  standard  should  be  adopted  in  law  as  it  had  been 
adopted  in  fact.  Ex-Gov.  Pollock,  Director  of  the 
Mint,  in  his  report  for  1861  called  attention  to  the  in- 
congruity of  a  silver  dollar  that  was  worth  3.10  cents 
more  than  the  gold  dollar  and  8  cents  more  than  two 
half  dollars.  He  recommended  that  it  should  either 
be  dropped  from  the  list  of  coins  or  reduced  in  weight 
so  as  to  correspond  with  the  subsidiary  coins.  He 
considered  that  gold  was  de  facto  the  standard  of 
value,  and  he  recommended  that  the  law  should  con- 
form to  the  fact.  But  the  nation  had  more  exciting 
topics  to  discuss  in  1861  than  those  relating  to  coinage. 
In  1866,  after  the  war,  Mr.  John  J.  Knox,  who  then 
had  charge  of  the  Mint  and  coinage  matters  in  the 


The  Gold  Standard. 


13 


Treasury  Department,  recommended  a  revision  of  all 
the  laws  relating  to  the  Mint.  Secretary  Boutwell  ap- 
proved of  the  suggestion.  Mr.  Knox  and  Dr.  Linder- 
man  were  appointed  in  1869  a  committee  to  make 
such  revision.  They  presented  their  report  with  a 
draft  of  a  bill  in  1870.  The  report  recommended  the 
discontinuance  of  the  silver  dollar,  this  coin  being 
obsolete. 

The  bill  and  report  were  transmitted  to  the  Finance 
Committee  of  the  Senate  on  the  25th  of  April,  1870. 
The  bill  passed  the  Senate  on  the  10th  of  January, 
1871.  It  made  the  gold  dollar  the  unit  of  value  and 
it  dropped  the  silver  dollar  from  the  list  of  coins. 
The  bill  failed  in  the  House  for  want  of  time.  The 
Forty-first  Congress  having  expired  without  final 
action  it  came  up  again  in  the  Forty-second.  It 
passed  the  House  May  27,  1872,  by  yeas  no,  nays  13. 
It  passed  the  Senate  January  17,  1873,  without  a  dis- 
senting vote.  The  metal  in  the  silver  dollar  at  that 
time  was  worth  two  cents  more  than  the  gold  dollar. 
No  objection  to  the  bill  was  heard  until  the  price  of 
silver  had  fallen  so  that  the  silver  dollar,  if  there  had 
been  any,  would  have  been  worth  less  than  the  gold 
dollar.  Then  it  became  fashionable  to  say  that  the 
bill  was  passed  surreptitiously.  The  truth  is,  that  the 
bill  was  before  Congress  two  years  and  ten  months, 
that  it  was  printed  thirteen  times  by  order  of  Con- 
gress, that  the  debates  on  it  occupy  sixty-six  columns 
in  the  Senate  proceedings,  and  seventy-eight  columns 
in  the  House  proceedings,  and  that  the  discontinuance 
of  the  silver  dollar  was  specially  discussed  in  the 
House.  Any  candid  person  must  see  that  the  reason 
why  the  discontinuance  of  the  silver  dollar  attracted 
so  little  notice  was  that  this  coin  had  been  discon- 
tinued de  facto  in  1834,  when  the  ratio  of  16  to  1  was 


14 


The  Gold  Standard. 


adopted.  I  have  given  reasons  for  thinking  that  this 
ratio  was  adopted  designedly  to  expel  the  silver  dol- 
lar from  circulation.  At  all  events,  it  did  so,  to  the 
satisfaction  of  the  people.  It  is  a  great  pity  that  our 
ancestors  in  1834  did  not  put  their  intentions  into  the 
form  of  law  at  that  time.  If  they  had  done  so  they 
would  have  spared  us  a  Pandora's  box,  to  be  opened 
forty  years  later. 

Bimetallism  was  abolished  in  the  United  States  by 
the  Act  of  1873.  It  has  not  been  re-established  by 
any  subsequent  act.  The  purchase  and  coinage  of  a 
limited  amount  of  silver  by  the  Government  is  not 
bimetallism.  Still  less  so  is  the  purchase  of  bullion 
which  is  not  coined.  Any  other  metal  would  answer 
as  well  as  silver  as  a  backing  for  the  issue  of  Treasury 
notes.  Let  us  imagine  for  a  moment  that  silver  had 
not  fallen  in  price  after  1873.  Would  anybody  ever 
have  missed  the  silver  dollar?  Would  anybody  have 
doubted  that  the  gold  standard  was  brought  about  in 
this  country  by  natural  causes  operating  upon  men's 
minds  in  the  same  way  as  it  was  in  England,  the 
action  of  Congress  in  1873  merely  giving  the  form  of 
law  to  what  had  been  done  practically  at  an  earlier 
period  ? 

THE  EXPERIENCE  OF  GERMANY. 

Prior  to  187 1  Germany  had  the  single  silver  stand- 
ard, but  as  she  could  not  transact  business  with  silver 
alone,  she  used  for  her  international  and  wholesale 
trade  a  heterogeneous  assortment  of  gold  coins,  partly 
domestic  and  partly  foreign,  including  napoleons, 
pistoles,  guineas,  eagles,  Russian  imperials,  Fried- 
richs  d'or,  ducats,  crowns,  &c,  passing  as  commercial 
money.  The  question  of  a  reform  of  the  currency 
had  been  under  discussion  by  the  economists  and  pub- 


The  Gold  Standard.  15 

licistsof  Germany  for  nearly  ten  years,  but  until  1868 
the  question  under  debate  was  a  question  of  uniformity 
of  money  rather  than  of  the  metallic  standard.  Dr. 
Soetbeer  had  indeed  published  two  articles  in  1863  and 
1864  in  the  Vicrtcljahrschrift  fur  Vol ksuirthsc  haft  on 
the  gold  standard,  but  it  was  not  until  after  the  Paris 
Monetary  Conference  of  1867  that  the  commercial 
classes  began  to  take  an  active  interest  in  the  question. 
This  Conference  was  held,  at  the  invitation  of  the 
French  Government,  to  consider  the  question  of  uni- 
formity of  coinage.  Nearly  all  the  governments  of 
Europe  were  represented.  The  United  States  were 
represented  also.  One  of  the  earliest  questions  to  be 
decided  was  that  of  a  standard.  The  first  vote  was 
on  the  question  of  adopting  the  single  standard  of 
silver.  This  was  rejected  unanimously.  Then  the 
single  standard  of  gold  was  adopted  with  only  one 
dissenting  vote — that  of  Holland.  Nobody  proposed 
bimetallism.  The  action  of  this  Conference  shows 
that  even  at  a  time  when  the  two  metals  were  at  an 
equilibrium  according  to  the  French  ratio,  France 
and  all  her  allies  of  the  Latin  Union  were  inclined  to 
adopt  the  single  gold  standard,  and  also  that  Ger- 
many, Austria,  Russia  and  the  Scandinavian  countries, 
all  of  which  at  the  time  had  the  single  silver  stand- 
ard, were  of  the  same  mind. 

After  this  event  a  great  many  publications  appeared 
in  Germany  showing  an  unmistakable  tendency  in  the 
public  mind  to  the  gold  standard.  The  most  import- 
ant of  these  is  the  report  which  Soetbeer  made  at 
the  Ninth  Congress  of  German  Economists  in  the 
3'ear  1868.  This  Congress  met  in  Hamburg  and  pro- 
nounced in  favor  of  the  unification  of  German  money, 
and  of  the  gold  standard.  Its  action  was  ratified 
soon  afterward  by  the  united  commercial  bodies  of 


16 


The  Gold  Standard. 


the  North  German  Confederation,  and  would  have 
been  carried  into  effect  at  once  but  for  the  war  with 
France.    This  event  postponed  the  reform  one  year. 

GERMAN  MONETARY  LAW  OF  1871. 

On  the  5th  of  November,  1871,  the  Finance  Min- 
ister of  the  new  German  Empire,  Herr  Delbriick,  pre- 
sented to  the  Imperial  Diet  a  brief  report  of  the 
"  motives  "  which  had  led  the  Government  to  propose 
a  measure  for  the  unification  of  the  German  coinage. 
This  measure  provided  for  the  coinage  of  gold  pieces 
of  ten  and  twenty  marks,  and  it  discontinued  the  coin- 
age of  large  silver  coins,  but  did  not  demonetize  those 
that  were  in  circulation.  The  report  says,  first  of  all,, 
that  it  may  be  considered  as  beyond  doubt  that  the 
existing  silver  standard  cannot  be  maintained.  The 
only  gold  coins  authorized  by  existing  law  were  Ger- 
man crowns  and  half-crowns,  but  these  had  no  fixed 
relation  to  the  standard  silver  coins  of  the  nation  nor 
to  those  of  any  other  country.  Consequently  they 
were  not  accepted  in  the  domestic  circulation.  They 
had  never  been  an  integral  part  of  it,  nor  had  they 
acquired  any  standing  in  international  commerce, 
being  melted  down  as  soon  as  they  reached  the  frontier. 
Consequently  the  internal  commerce  of  Germany  was 
confined  to  the  use  of  bulky  and  inconvenient  silver 
coins.  "  The  inconvenience  of  silver  coins,''  says  the 
report,  "  led  of  necessity  to  a  very  considerable  cir- 
culation of  paper,  which,  in  ordinary  times,  is  taken 
as  a  welcome  facility,  but  in  critical  times  con- 
tains the  germs  of  serious  dangers.  The  arti- 
ficial demand  for  paper  created  by  the  ex- 
clusive circulation  of  silver  made  it  almost 
impossible  to  adopt  any  radical  and  rational 
regulation  of  the  banking  system  through  laws  com- 


The  Gold  Standard. 


17 


mon  to  all  Germany."  For  these  reasons— namely, 
that  silver  was  bulky  and  inconvenient,  and  that  it 
brought  about  a  forced  circulation  of  paper  and  pre- 
vented any  wise  regulation  of  bank  issues — the  single 
gold  standard  was  recommended,  with  a  silver  sub- 
sidiary coinage.  The  measure  was  supported  by  very 
strong  speeches  by  Minister  Delbruick  and  by  Dr. 
Bamberger,  and  it  passed  on  the  23d  of  November. 
This  measure  was  provisional  only,  a  second  and  more 
detailed  one  being  enacted  two  years  later. 

It  is  said  by  some  that  Germany,  by  demonetizing 
silver  in  1871  and  by  selling  it  in  1873  and  later,  drove 
France  and  the  Latin  Union  into  a  suspension  of  sil- 
ver coinage,  and  caused  the  great  decline  in  the  price 
of  that  metal.  If  this  were  true  it  might  possess  an 
academic,  but  hardly  a  practical  interest.  Germany 
is  not  answerable  to  us  for  her  tastes.  We  cannot 
call  her  people  to  account  for  liking  to  have  gold  in 
their  pockets  or  sauerkraut  on  their  tables.  We  can- 
not go  back  to  1 87 1  or  blot  out  the  intervening  years. 
Nor  have  we  been  able  to  persuade  Germany  that  she 
has  made  any  mistake  in  her  new  monetary  system. 
She  declined  to  take  part  in  the  Monetary  Conference 
of  1878.  She  came  with  reluctance  to  that  of  1881, 
and  announced  at  the  outset  that  she  could  not  join  in 
any  movement  for  the  free  coinage  of  silver.  She  re- 
peated this  declaration  at  an  early  stage  of  the  recent 
Brussels  Conference.  So  I  feel  warranted  in  saying 
that  the  question  whether  Germany  has  been  guilty 
above  others  in  oppressing  or  depressing  silver  is  of 
no  practical  consequence. 

But  such  a  charge  cannot  be  sustained.  Germany 
had  completed  her  new  monetary  system  and  stopped 
selling  silver  in  1879,  and  the  Latin  Union  countries 
had  closed  their  mints  to  silver  three  years  earlier. 


1 8 


The  Gold  Standard. 


whereas  silver  continued  to  decline  all  the  same. 
The  London  price  for  1879  (average)  was  5 1  J^d.  per 
ounce.  It  is  now  38d.  The  decline  has  been  greater 
since  Germany  stopped  selling  than  it  was  before. 
From  1 87 1  to  1879  tne  aggregate  decline  was  9d.  ; 
from  1879  t0  1893  it  has  been  13d. 

The  simple  truth  is  that  Germany  was  driven  to  the 
gold  standard,  just  as  Great  Britain  and  the  United 
States  had  been  previously,  by  the  inconveniencies  of 
silver  money.  These  inconveniencies  manifested 
themselves  with  some  variations  of  detail  in  different 
countries,  but  all  grew  out  of  the  ponderousness  of 
silver,  an  evil  which  increased  with  the  growth  of 
commerce.  Some  persons  habitually  speak  of  silver 
as  a  twin  sister  to  whom  some  grievous  injustice  has 
been  done.  All  such  must  admit  that  she  is  a  very 
corpulent  one. 

FRANCE  BEFORE  THE  REVOLUTION. 

We  will  now  look  at  the  course  of  events  in  France. 
Here  the  livre  was  originally  a  pound  weight  of  silver. 
It  was  debased  by  royal  authority  from  time  to  time, 
as  in  England,  but  much  more  rapidly.  M.  Beranger, 
in  his  report  on  the  French  monetary  system  in 
1802,  says  that  the  ratio  of  gold  to  silver  was  changed 
twenty-six  times  between  1602  and  1773,  and 
that  the  livre  at  the  time  when  he  wrote  had 
been  reduced  to  the  seventy-sixth  part  of  its 
original  weight.  The  livre  is  now  called  the 
franc.  It  is  impossible  to  trace  any  scientific  connec- 
tion between  these  recoinages  and  the  metal  ratios 
except  that  the  divergencies  between  the  legal  and 
market  ratios,  whenever  they  were  discovered,  were 
seized  upon  by  the  Government  as  an  excuse  for  fur- 
ther debasement.    They  "  fell  back  alternately  from 


The  Gold  Standard. 


19 


gold  to  silver  and  from  silver  to  gold,'' says  Beranger, 
making  a  profit  to  the  royal  treasury  each  time.  M. 
Calonne,  Comptroller-General  under  Louis  XVI.,  has 
given  us  a  list  of  the  principal  recoinages  prior  to  his 
time,  of  which  there  were  four  in  the  reign  of  Louis 
XIV.  and  five  in  that  of  Louis  XV. 

It  would  be  a  waste  of  time  to  recount  them.  The 
ratio  existing  when  Louis  XVI.  came  to  the  throne 
was  I4f  to  1.  It  had  been  adopted  in  1726.  The 
legal  ratio  in  England  at  that  time,  as  we  have  seen, 
was  1 5 1.  Both  ratios  were,  or  gradually  became, 
divergent  from  the  market  ratio.  Silver  was  exported 
from  England  and  gold  was  exported  from  France. 
A  recoinage  in  the  latter  country  became  necessary, 
and  this  was  undertaken  and  executed  by  Calonne  in 
good  faith  in  the  year  1785.  Calonne  chose  the  ratio 
of  15-J.  This  ratio  was  in  force  when  the  celebrated 
law  of  1803  was  passed,  under  the  Consulate.  It  was 
not  exactly  conformable  to  the  market  ratio  at  the 
time.  It  rated  gold  too  highly,  but  Calonne  said  that 
he  had  observed  that  gold  had  an  advancing  ten- 
dency, and  he  believed  that  if  15^  was  not  the  true 
ratio  then,  it  would  become  so  before  long.  In  this 
he  was  right,  for  when  the  law  of  1803  was  passed, 
there  was  no  observable  tendency  to  export  either 
metal,  and  the  Hamburg  market  ratio,  as  tabulated  by 
Soetbeer,  was  very  close  to  15^. 

FRENCH  MONETARY  LAW  OF  1803. 

I  have  in  another  place  made  a  study  of  the  docu- 
ments and  debates  which  preceded  and  led  up  to  the 
French  Monetary  Law  of  1803  (see  Political  Sciefice- 
Quarterly,  June,  1891).  The  substance  is  that  these 
learned  and  patriotic  men,  without  exception,  con- 
sidered a  double  standard  impossible  and  any  attempt 


20 


The  Gold  Standard. 


to  establish  it  disastrous.  They  accordingly  deter- 
mined to  establish,  and  thought  that  they  had  es- 
tablished, the  single  silver  standard  by  a  law,  the  first 
paragraph  of  which  reads  as  follows  : 

"  General  provision. — Five  grams  of  silver,  nine- 
tenths  fine,  constitute  the  monetary  unit  which  re- 
tains the  name  of  franc." 

But  they  were  confronted  by  the  fact  that  gold  was 
an  indispensable  part  of  the  monetary  system.  How 
to  retain  it  in  the  circulation  as  a  subordinate  metal 
while  making  silver  the  sole  standard  was  the  great 
puzzle  of  the  day.  No  less  than  eight  important 
papers  were  drawn  up  from  time  to  time  on  this 
question,  and  no  decision  was  ever  reached  except  to 
allow  gold  to  be  coined  at  the  French  mint  at  the 
ratio  of  1 5  J  to  1,  with  the  understanding  that  if  the 
market  ratio  should  change,  the  gold,  but  not  the  sil- 
ver, should  be  recoined. 

Such  was  the  law  of  1803.  Although  it  was  the  in- 
tention of  the  lawmakers  to  establish  the  single  silver 
standard,  the  clause  which  they  introduced  allowing 
the  coinage  of  gold  was  the  same  thing  in  effect  as 
re-enacting  Calonne's  law  of  1785.  It  was  in  practice, 
though  not  in  intention,  a  bimetallic  law  at  the  ratio 
of  15 J  to  1. 

Almost  immediately  after  its  enactment  France 
plunged  into  wars  which  lasted  till  18 15.  Of  course, 
the  nation  had  very  little  time  to  think  about  her 
coinage  laws.  Gradually  the  price  of  gold  rose  above 
the  legal  ratio,  and  that  metal  was  exported  to  such 
an  extent  that  Chevalier  tells  us  that  "  twenty-five 
years  after  that  date  [1803]  the  circulation  consisted 
of  silver  only."  Abundant  proofs  can  be  adduced 
showing  that  bimetallism  did  not  exist  in  practice  in 


The  Gold  Standard. 


21 


France  between  1820  and  1847.  ^lr-  Griffen  has  pub- 
lished a  table  showing-  the  premium  on  gold  in  Paris 
during-  every  month  of  that  period.  This  premium 
was  at  times  as  high  as  two  per  cent.  The  contention 
of  the  bimetallists  that  the  French  law  of  1803  kept 
the  ratio  steady  at  1 5^  till  1873  is  not  supported  by 
facts. 

THE  GREAT  INRUSH  OF  GOLD. 

From  1850  to  i860  there  was  an  enormous  increase 
in  the  production  of  gold  in  Russia,  California  and 
Australia,  and  scarcely  any  increase  in  that  of  silver. 
The  market  ratio  declined  to  15.46  in  the  year  1 85 1, 
so,  of  course,  gold  could  again  circulate  in  France. 
The  ratio  continued  to  decline  till  1859,  when  it 
reached  its  lowest  point,  viz.,  15.19.  It  remained 
below  15^  till  1867.  During  this  interval  of  sixteen 
years  France  imported  8600,000,000  of  gold  and  ex- 
ported about  half  that  amount  of  silver.  Her  circu- 
lation became  saturated  with  the  yellow  metal  to  the 
great  delight  of  her  people,  who  had  become  tired  of 
carrying  sacks  of  five-franc  pieces  to  and  fro  in  cabs 
and  handcarts. 

The  exportation  of  silver  from  France  was  so  ex- 
tensive at  this  time  that  the  country  was  almost 
denuded  of  small  money.  It  became  necessary  to 
coin  gold  pieces  as  small  as  five  francs.  In  1857  the 
scarcity  of  silver  became  so  great  that  the  Govern- 
ment appointed  a  commission  to  investigate  the  sub- 
ject. This  commission  was  bent  upon  maintaining 
the  silver  standard.  So,  instead  of  following  the  ex- 
ample of  the  United  States  and  making  silver  coins 
of  light  weight  and  of  limited  legal  tender,  it  recom- 
mended that  an  export  duty  be  put  on  silver,  that 
bullion  brokers  be  prosecuted,  and  that  assorting  and 


22 


The  Gold  Standard. 


trading  in  coins  be  prohibited  by  law.  In  other 
words,  this  sapient  commission  went  back  for  inspira- 
tion to  the  times  of  Louis  XIV.  and  of  James  I.  and 
Charles  I.  of  England.  Some  attempts  were  actually 
made  to  carry  out  these  senseless  recommendations, 
but  they  were  soon  abandoned.  It  was  about  this 
time  that  Chevalier,  the  French  economist,  who  was 
a  stout  champion  of  the  silver  standard,  proposed  to 
solve  the  difficulty  by  providing  that  French  gold 
coins  should  have  a  fixed  weight,  but  a  variable  value, 
and  that  the  value  should  be  announced  by  legislative 
decree  at  certain  short  intervals.  M.  Levasseur, 
another  economist  of  renown,  but  with  a  keener 
vision,  expressed  the  opinion  that  gold  had  made 
itself  the  standard  in  spite  of  the  law,  and  he  sug- 
gested that  the  wisest  thing  for  France  to  do  was  to 
make  the  law  conform  to  the  fact. 

THE  LATIN  MONETARY  UNION. 

Nothing  was  done  at  that  time.  Events  drifted  till 
1864,  when  the  lack  of  small  change  had  become  so 
serious  that  the  Government  brought  a  bill  before  the 
Corps  Legislatif  authorizing  the  lowering  of  the  fine- 
ness of  all  the  silver  coins  less  than  five  francs  to  835 
instead  of  900  thousandths.  This  was  in  effect  the 
same  thing  that  we  had  done  in  1853,  when  we  con- 
verted all  our  silver  coins  less  than  one  dollar  into 
token  money.  The  proposal  was  more  shocking  to 
the  French  legislator  than  to  the  American,  for  the 
reason  that  the  franc  was  the  monetary  unit  sanctioned 
by  the  law  of  1803,  and  this  monetary  unit  was  one 
of  the  very  things  to  be  lowered.  The  Legislature 
recoiled,  but  it  sustained  the  lowering  of  the  pieces 
smaller  than  one  franc.  The  difficulty  could  not  be 
removed  by  such  homoeopathic  treatment,  and  as  the 


The  Gold  Standard. 


23 


same  difficulty  existed  in  the  neighboring  countries  of 
Belgium  and  Switzerland,  a  convention  was  called  for 
the  purpose  of  adopting-  some  common  steps  for  re- 
lief. Italy  also  was  induced  to  join,  and  soon  after- 
wards Greece.  France  considered  it  admissible  to  do 
by  treaty  what  she  had  not  been  willing  to  do  by 
direct  act.  By  treaty  dated  December  23,  1865,  these 
four  countries  adopted  their  present  token  coinage  of 
silver  and  limited  its  legal-tender  faculty  to  fifty 
francs.  This  was  the  origin  of  the  so-called  Latin 
Monetary  Union. 

HOW  FRANCE  CAME  TO  THE  GOLD 
STANDARD. 

In  1867  the  price  of  silver  had  again  declined,  so 
that  the  French  ratio  of  15  J  was  substantially  iden- 
tical with  the  market  ratio.  That  was  the  year  of  the 
International  Monetary  Conference,  of  which  mention 
has  already  been  made,  at  which  France  voted  in 
favor  of  the  single  gold  standard.  Nevertheless,  the 
French  legislators  abandoned  the  silver  standard  with 
extreme  reluctance.  They  were  attached  to  it  by 
custom  and  tradition.  They  still  desired,  like  their 
ancestors  of  the  Revolution,  to  have  the  silver  stand- 
ard with  gold  as  a  subordinate  metal.  They  allowed 
events  to  drift  until  1873,  when  they  were  startled  to 
find  that  154,000,000  francs'  worth  of  silver  had  been 
deposited  at  the  mint  for  coinage  in  that  year,  against 
only  5,000,000  francs'  worth  in  I871-2.  The  amount 
of  silver  so  deposited  was  more  than  the  mint  could 
coin  in  a  year  and  a  half,  if  it  did  nothing  else.  The 
market  ratio  of  gold  had  risen  nearly  to  15.75.  There 
was  a  profit  of  1^  per  cent,  in  sending  silver  bullion 
to  the  mint  and  using  the  resulting  coin  to  buy  gold 
for  export.    The  delegates  of  the  Latin  Monetary 


24 


The  Gold  Standard. 


Union  were  hastily  assembled  and  they  determined 
to  limit  the  coinage  of  silver  to  120,000,000  francs  per 
year  for  all  the  countries  concerned.  This  was  virtu- 
ally the  adoption  of  the  gold  standard. 

At  the  beginning  of  1876  the  market  ratio  had 
reached  nearly  seventeen  to  one.  The  crisis  was  be- 
coming acute.  Switzerland  had  ceased  to  coin  her 
allotted  share  of  silver.  Belgium  had  passed  a  law 
authorizing  the  Government  to  stop  coining  that 
metal.  M.  Leon  Say,  the  French  Minister  of  Finance, 
sent  to  the  Senate  March  21,  1876,  a  bill  of  only  two 
lines,  in  these  words,  viz. :  "  The  coinage  of  silver 
five-franc  pieces  may  be  limited  or  suspended  by  de- 
cree.'' The  Senate  Committee  to  which  it  was  re- 
ferred, under  the  lead  of  M.  de  Parieu,  reported  a 
more  drastic  measure  absolutely  forbidding  the  coin- 
age of  any  silver  money  of  full  legal  tender.  The 
legislative  body  again  showed  its  aversion  to  change 
by  rejecting  the  Senate  report  and  adopting,  on  the 
5th  of  August,  the  more  moderate  measure  of  the 
Minister  of  Finance.  But  it  really  made  no  differ- 
ence which  of  the  two  was  adopted.  The  door  of 
the  French  mint  was  closed  to  silver  on  the  following 
day,  and  has  not  been  reopened. 

I  think  it  has  been  shown  that  the  gold  standard 
made  its  way  in  France  not  only  without  design  on 
the  part  of  individuals,  but  in  spite  of  the  strenuous 
resistance  of  almost  all  the  men  who  busied  them- 
selves with  the  subject  at  all.  I  have  given  a  good 
deal  of  space  to  the  experience  of  France,  because  of 
the  great  importance  which  has  always  been  assigned 
to  that  country  by  the  advocates  of  bimetallism. 

EXPERIENCE  OF  BELGIUM  AND  HOLLAND. 

It  is  unnecessary  to  go  into  details  concerning  the 
other  members  of  the  Latin  Union,  but  one  fact  as 


The  Gold  Standard. 


25 


regards  Belgium  deserves  notice.  This  country  was 
an  integral  part  of  France  when  the  law  of  1803  was 
passed.  Her  monetary  system  was  accordingly 
identical  with  that  of  France  until  1832,  when  she 
adopted  the  single  silver  standard  retaining  the  franc 
as  the  monetary  unit.  In  1 861,  when  the  great  influx 
of  gold  from  California  and  Australia  had  made  such 
a  change  in  the  monetary  conditions  of  France,  the 
people  of  Belgium  began  to  taste  the  luxury  of  gold  in 
the  form  of  French  coins.  There  was  straightway  a 
popular  demand  that  French  gold  should  be  made 
legal  tender  in  Belgium.  The  Finance  Minister, 
Frere  Orban,  resisted  it.  He  was  impressed  with  the 
views  of  Chevalier  in  favor  of  silver,  to  which  allusion 
has  already  been  made.  The  popular  demand  grew 
apace,  and  Frere  Orban,  rather  than  yield  to  it,  re- 
signed his  office.  Then  the  bill  was  passed,  and  Bel- 
gium obtained  what  her  people  wanted,  that  is,  the 
gold  standard. 

The  experience  of  Holland  is  no  less  instructive. 
Prior  to  1847  this  country  had  the  double  standard  at 
the  ratio  of  15.60  to  1.  She  had  become  convinced, 
however,  that  a  double  standard  was  merely  an  alter- 
nate standard,  first  one  thing  and  then  the  other.  So 
she  decided  to  have  a  single  standard,  and  adopted 
that  of  silver  in  1847. 

When  Germany  adopted  the  gold  standard  a  com- 
mission was  appointed  by  the  King  of  the  Nether- 
lands to  examine  the  monetary  question.  It  recom- 
mended that  the  coinage  of  silver  be  suspended  for  six 
months,  and  a  bill  to  that  effect  was  passed  in  May, 
1873.  This  law  was  renewed  twice  for  periods  of  six 
months  each.  A  second  report  of  the  Commission 
was  made,  recommending  a  bill  for  the  adoption  of 
the  single  gold  standard,  but  this  bill  was  rejected  by 


26 


The  Gold  Standard. 


the  second  Chamber  in  March,  1874.  When  the  law 
suspending  the  coinage  of  silver  expired  in  May,  1874, 
immense  quantities  of  silver  began  to  flow  to  the  mint. 
Silver  florins  passed  in  trade  at  the  old  ratio  of  15.60 
because  they  were  limited  in  quantity,  but  it  was  ob- 
vious that  they  would  soon  fall  to  the  bullion  value  of 
silver.  So  in  December,  1874,  a  new  six-months'  sus- 
pension of  coinage  was  ordered  by  the  legislative 
body — the  same  one  that  had  refused  to  adopt  the 
single  gold  standard.  Before  this  period  had  elapsed 
the  Minister  of  Finance  proposed  that  the  silver  coin- 
age be  discontinued  indefinitely  and  that  gold  coin- 
age be  allowed.  This  bill  was  passed  in  June,  1875. 
Here  again  the  gold  standard  made  its  way  over  the 
heads  of  the  wise  men  of  the  time. 

THE  GOLD  STANDARD  IN  AUSTRIA. 

The  adoption  of  the  gold  standard  by  Austria  is 
now  in  progress,  and  there  is  every  assurance  that  it 
will  be  carried  into  effect.  That  country  had  had  the 
single  silver  standard  since  1857,  but  was  under  a 
suspension  of  specie  payments.  When  it  was  ascer- 
tained in  1879  that  the  decline  in  silver  was  likely  to 
be  permanent  the  Government  gave  orders  to  the 
mints  in  both  Austria  and  Hungary  to  receive  no 
more  of  that  metal  from  private  individuals  for  coin- 
age. The  effect  of  this  order  was  to  make  Govern- 
ment paper  money  the  standard,  and  this  paper  varied 
from  day  to  day  in  comparison  with  gold,  as  did  our 
greenbacks  before  we  resumed  specie  payments. 
Some  silver  was  coined  on  Government  account,  but 
as  a  matter  of  fact  that  metal  was  discarded  as  a 
standard  by  the  refusal  to  coin  for  private  persons. 
Austria  had  a  gold  coinage,  indeed,  but  the  gold  was 
commercial  money  only.     It  had  no  legal-tender 


The  Gold  Standard. 


27 


faculty,  but  passed  at  its  quoted  value  from  day  to 
day.  Since  1879  tne  problem  of  finance  in  Austria 
has  been  two-fold,  namely,  to  resume  specie  pay- 
ments (which  must,  under  the  circumstances,  be  gold 
pavments),  and  to  fix  a  ratio  at  which  all  paper 
money  and  paper  obligations  should  be  redeemable. 
The  ratio  decided  upon  was  that  of  119  paper  to  100 
gold,  that  being  the  average  ratio  prevailing  in  the 
market  during  the  thirteen  years  from  1879  to  1892. 

As  the  question  of  standard  was  really  settled  by 
Austria  in  1879,  when  she  closed  her  mints  to  silver, 
we  are  concerned  to  know  how  she  came  to  take  that 
step.  The  report  of  the  special  commission  of  the 
upper  house  on  this  subject,  submitted  last  year,  says 
that  it  had  become  clear  as  long  ago  as  the  decade 
1 860-1 870,  when  Europe  was  becoming  saturated 
with  gold,  that  this  was  the  only  metal  fitted  to  be 
the  standard  of  nations  of  advanced  civilization. 
*'  Gold  was  dominant  and  the  standard  of  value," 
says  this  report,  "in  all  trade  on  a  great  scale  as  early 
as  the  fourteenth  and  fifteenth  centuries,  even  though 
silver  was  then  the  standard  in  all  domestic  ex- 
changes. *  *  *  In  every  age  there  is  some  metal 
dominant  in  the  industry  of  the  world  which  forces  its 
way  with  elemental  strength  in  the  face  of  any  public 
regulation,  and  in  our  day  gold  is  that  metal." 

This  is  as  good  a  statement  as  can  be  made  of  the 
reasons  why  not  only  Austria  but  all  the  other  nations 
whose  action  we  have  examined,  including  the  United 
States,  have  adopted  the  single  gold  standard. 
While  Austria  has  been  collecting  her  supply  of  the 
yellow  metal  we  have  heard  a  great  deal  about  the 
"  scramble  for  gold."  Why  is  there  a  scramble  for 
gold?  Merely  because  gold  is  universally  acceptable. 
All  civilized  people  are  willing  to  exchange  their 


28 


The  Gold  Standard. 


property  for  it  to  any  extent,  and  this  is  the  only 
thing  they  are  willing  to  accept  in  that  way  without 
limit  or  reserve.  That  is  a  good  and  sufficient  reason 
why  there  is  a  scramble  for  gold  and  why  there  is  no 
similar  scramble  for  silver. 

A  NATURAL  EVOLUTION. 

If  we  find  a  movement  of  civilized  mankind  going 
on  steadily  for  a  hundred  years,  working  out  in  dif- 
ferent countries  uniform  results  which  commend 
themselves  to  successive  generations,  the  presump- 
tions are  all  in  favor  of  that  movement  being  bene- 
ficial. At  all  events,  the  burden  of  proof  is  upon 
those  who  think  differently.  I  am  so  well  convinced 
of  the  benefits  of  the  single  gold  standard  that  if 
all  power  were  placed  in  my  hands  I  would  not 
introduce  anything  different  from  it.  I  should  con- 
sider it  presumptuous  to  attempt  to  interfere  with  an 
obviously  natural  evolution  in  human  affairs.  I  should 
know,  moreover,  that  such  an  attempt  would  be 
futile,  because  the  first  step  to  be  taken  would  be  to 
alter  the  preferences  and  likings  of  individual  men. 
Society  consists  of  aggregations  of  individuals,  who 
in  their  private  business  prefer  one  ounce  of  gold  to 
sixteen  ounces  of  silver,  or  twenty-five  ounces,  as  the 
case  may  be.  Unless  I  can  change  this  preference 
and  liking  I  cannot  alter  the  monetary  standard  of 
Christendom.  It  is  this  preference  which  paralyzes 
all  the  international  monetary  conferences.  The 
secret  thought  of  the  delegates  in  the  Brussels  Con- 
ference was  something  like  this  :  "  What  would  hap- 
pen the  day  after  international  bimetallism  if  the 
commercial  classes  should  continue  to  prefer  one 
ounce  of  gold  to  sixteen  ounces  of  silver?  "  Any  re- 
sponsible minister  of  finance  must  recoil  before  that 
query. 


The  Gold  Standard. 


29 


I  think  that  the  <4  scramble  for  gold  "  would  be 
worse  the  day  after  the  bimetallic  treaty  than  it  was  the 
day  before,  because  everybody  would  suspect  every- 
body else  of  gratifying  his  secret  desire  for  gold  at 
the  expense  of  his  neighbors.  It  should  be  remarked 
that  the  Brussels  Conference,  as  a  body,  never  touched 
the  question  of  bimetallism,  although  some  of  the 
members  improved  the  opportunity  to  make  speeches 
on  that  subject.  The  Conference  went  to  pieces  on  a 
minor  question — that  of  buying  a  little  more  silver. 
The  proposal  was  that  the  nations  should  purchase  a 
certain  amount  of  an  article  that  none  of  them  wanted. 
When  the  representatives  of  France  and  the  Latin 
Union  had  the  intrepidity  to  say  that  they  would  not 
recommend  that  policy  to  their  governments,  even  if 
it  should  be  adopted,  the  bottom  dropped  out  of  the 
Conference  altogether.  Although  Mr.  Bland  has 
given  his  attention  to  this  matter  as  a  humorist,  in  a 
magazine  article,  I  think  that  he  has  come  short  of 
exhausting  the  subject. 

NO  STEPS  BACKWARD. 

If  the  successive  steps  that  we  have  described, 
whereby  the  nations  have  arrived  one  by  one  at  the 
single  gold  standard,  had  been  the  result  of  a  hundred 
years'  conspiracy  against  the  "  debtor  class,"  instead 
of  being  a  natural  evolution  beneficial  to  all  classes,  1 
should  still  be  unable  to  see  any  advantage  in  chang- 
ing back.  Whatever  mischief  appertains  to  this  evolu- 
tion has  been  done  and  now  belongs  to  the  remote 
past.  Those  books  are  closed.  To  retrace  the  steps 
would  merely  double  the  wrong,  inflicting  it  upon  a 
new  lot.  Those  who,  according  to  the  hypothesis, 
suffered  in  the  past  are  mostly  dead.  If  there  be  any 
such  victims  living  in  France  or  Germany,  in  Holland 


3Q 


The  Gold  Standard. 


or  Belgium,  or  Scandinavia,  they  are  very  slow  in 
disclosing  themselves  to  the  various  international  con- 
ferences held  for  their  benefit.  They  are  very  back- 
ward in  coming  forward. 

What  is  meant  by  "  debtor  class  "  in  this  discussion  ? 
All  men  who  are  not  bankrupt  are  both  creditors  and 
debtors.  The  fact  that  they  are  not  bankrupt  implies 
that  they  have  more  due  to  them  in  one  way  and 
another  than  they  owe.  I  am  proud  to  believe  that 
the  vast  majority  of  my  countrymen  are  of  this  class, 
i.  e.,  of  the  creditor  class.  1  take  it  that  we  are  not 
legislating  specially  for  bankrupts.  Certainly  it 
would  not  be  wise  to  change  our  standard  of  value 
for  their  accommodation.  Such  a  change  would  pro- 
duce a  great  many  new  bankrupts  and  would  not  save 
any  old  ones. 

What  our  country  needs  is  more  capital.  This  is 
especially  true  of  the  West  and  South.  There  is  a 
great  deal  of  foreign  capital  that  would  like  to  come 
here,  but  is  deterred  by  apprehensions  of  a  change  in 
the  standard  of  value.  This  is  not  conjecture  on  my 
part,  but  actual  knowledge.  I  do  not  think  there 
will  be  a  change  of  standard.  I  believe  in  the  per- 
sistence of  gold  both  here  and  in  Europe,  but  the 
belief  is  very  strong  in  Europe  that  we  shall  slip  off 
the  gold  standard,  if  we  do  not  go  off  intentionally. 
Consequently  they  keep  their  money  at  home  or  in- 
vest it  here  only  on  call,  and  they  withdraw  it  in  cases 
where  they  can  do  so  without  loss.  This  rule  oper- 
ates with  our  own  capitalists  more  or  less.  If  money 
is  tight,  it  is  because  credit  is  paralyzed.  Lenders  are 
afraid  lest  the  continued  operation  of  the  Silver  Law 
should  bring  about  a  change  of  the  standard,  so  that 
they  would  get  back  less  than  they  have  put  out. 
While  this  state  of  mind  continues,  it  is  immaterial,  so 


The  Gold  Standard. 


31 


far  as  borrowers  are  concerned,  whether  the  amount 
of  cash  in  the  country  is  large  or  small. 

We  are  told  that  there  is  not  gold  enough  in  the 
world  to  do  the  business  of  the  world.  I  have  been 
hearing  this  for  seventeen  years.  How  do  you  know 
that  there  is  not  enough  ?  If  there  was  not  enough 
seventeen  years  ago,  there  may  be  enough  now,  seeing 
that  there  has  been  an  addition  to  it  of  81,500,000,000 
during  that  interval,  after  making  a  liberal  deduction 
for  the  amount  used  in  the  arts.  The  old  stock  does 
not  disappear  with  use.  I  have  a  gold  coin  of  the 
reign  of  Philip  of  Macedon,  on  which  the  name  and 
face  of  that  monarch  are  so  well  preserved  as  to 
possess  artistic  as  well  as  archaeological  value.  There 
is  no  ascertainable  relation  between  the  amount  of  gold 
in  the  world  and  the  amount  of  business  done  or  to  be 
done.  The  function  of  gold  as  a  standard  of  value  is 
increasing  while  its  function  as  a  form  of  currency  is 
diminishing.  The  time  is  surely  coming  when  its 
currency  function  in  civilized  countries  will  be  limited 
to  international  payments  and  to  the  wants  of  trav- 
elers. That  time  has  already  been  reached  in  the 
greater  part  of  the  United  States  and  Canada. 

ALLEGED  FALL  OF  PRICES. 

We  are  told  that  the  single  gold  standard  has  caused 
a  disastrous  fall  in  the  prices  of  commodities;  also 
that  it  has  put  an  unjust  burden  upon  those  who  have 
borrowed  money  on  mortgage.  I  have  seen  no  proof 
that  the  adoption  of  the  gold  standard  by  Europe  and 
the  United  States  has  caused  a  decline  in  prices  of 
commodities,  nor  can  I  admit  that  such  a  decline 
would  be  a  bad  thing.  None  of  us,  when  we  go  to 
market,  complain  that  prices  of  food,  fuel,  clothing, 
etc.,  are  too  low.    Mr.  David  A.  Wells  has  written  a 


32 


The  Gold  Standard. 


book  entitled  "  Recent  Economic  Changes,"  which 
accounts  for  the  fall  in  price  of  all  staple  articles  of 
commerce  which  really  have  fallen  during  the  past 
twenty  years,  accounts  for  it  by  the  increased  facilities 
for  producing  and  transporting  the  same.  He  has 
not  grouped  them  all  together,  as  our  bimetallist 
friends  commonly  do,  but  has  taken  each  one  separ- 
ately. I  commend  his  example  in  this  particular  to 
their  imitation. 

As  to  mortgage  debts,  I  have  learned  by  inquiry  of 
the  leading  mortgage  companies  in  New  York  that 
farm  mortgages  are  generally  made  for  the  term  of 
five  years,  and  that  about  25  per  cent,  of  them  are 
paid  at  or  before  maturity.  Consequently,  any  wrong 
which  mortgagors  are  now  suffering,  in  consequence 
of  the  gold  standard,  must  have  accrued  since  1888. 
To  redress  their  supposed  wrongs  we  are  asked  to 
turn  the  whole  business  of  the  country  upside  down 
and  change  the  rating  of  all  other  contracts  perhaps 
35  per  cent.  But  the  average  duration  of  mortgages 
is  considerably  less  than  five  years.  The  Topeka 
Capitol  newspaper  a  year  or  two  ago  made  a 
special  investigation  of  the  records  of  a  number  of 
agricultural  counties  in  Kansas,  and  found  that  more 
mortgages  were  paid  off  than  were  put  on  within  the 
period  covered  by  the  investigation.  Hence  the  pre- 
sumption is  that  the  average  life  of  the  farm  mort- 
gage in  Kansas  is  not  more  than  two  and  one-half 
years.  I  am  aware  that  many  mortgages  are  allowed 
to  run  for  indefinite  periods  after  they  fall  due,  but 
these,  after  they  fall  due,  are  call  loans  on  real  estate 
security.  I  am  not  aware  that  borrowers  on  call  are 
complaining  of  the  gold  standard.  At  all  events,  if 
they  are  oppressed  by  reason  of  that  standard  they 
can  relieve  themselves  at  any  time  by  paying  up.  If 


Tin:  Gold  Standard. 


33 


they  do  not  pay  and  are  solvent,  it  must  be  because 
they  find  it  to  their  advantage  to  endure  these  so- 
called  oppressions  a  while  longer.  It  is  safe  to  say 
that  all  these  mortgages  would  be  called  in  on  the 
first  sign  of  a  change  in  the  monetary  standard.  The 
tightness  of  money  in  such  an  event  may  be  imagined, 
but  can  hardly  be  described. 

NATIONAL  DEBTS. 

It  is  insisted  that  national  and  State  debts  are  en- 
hanced by  the  prevalence  of  the  single  gold  standard. 
To  prove  this  we  are  asked  to  compare  the  low  prices 
of  the  present  day  with  prices  of  past  times.  Does 
not  that  prove  that  the  bondholder  gets  more  value 
now  than  he  bargained  for,  and  hence  that  the  tax- 
payer pays  more  ? 

No,  it  does  not.  Bondholders  are  entitled  to  share 
with  others  the  advantages  of  low  prices  of  manufac- 
tured goods  resulting  from  new  inventions  and  facili- 
ties for  production  and  transportation.  As  to  prod- 
ucts of  the  farm,  prices  were  much  lower  when  I 
was  a  boy  than  they  are  now.  Eggs  sold  then  for  4 
cents  per  dozen,  butter  for  6  to  8  cents  per  pound, 
corn  for  15  cents  per  bushel,  wood  for  $1  per  cord, 
etc.,  etc.  If  the  gold  standard  has  had  any  lowering 
effect  on  prices  it  has  not  touched  these  articles.  But 
why  should  we  shed  tears  over  national  and  State 
debts,  seeing  that  ours  are  nearly  all  paid  ?  Let  the 
crocodiles  of  Europe  weep  over  the  enhanced  burden 
of  national  debts  if  there  be  any  such  enhancement 
due  to  the  gold  standard,  which  I  take  leave  to  deny. 

Suppose  it  were  true  that  national  and  State  debts 
were  enhanced  in  the  manner  alleged,  would  that  be 
a  reason  for  changing  the  standard  of  value  for  the 
countless  daily  transactions  of  business  ?    The  bank 


34 


The  Gold  Standard. 


clearings  of  seventy-nine  cities  in  the  United  States 
for  the  week  ending  May  20  amounted  to  $1,165,478,- 
664,  which  is  about  double  the  interest-bearing  debt 
of  the  nation.  Add  to  this  the  payments  of  wages 
and  the  retail  transactions  that  are  not  embraced  in 
clearing-house  returns,  and  then  multiply  the  whole 
by  the  fifty-two  weeks  of  the  year  and  you  will  see 
how  large  a  cannon  you  are  loading  to  kill  a  mosquito 
and  what  a  tremendous  recoil  it  must  have. 


A  FEW  WORDS  MORE  ON  THE  COINAGE 
ACT  OF  1873. 

From  the  N.  Y.  Evening  Post,  July  3,  1893. 

A  correspondent  for  whom  we  have  a  good  deal  of 
respect  writes  to  us  to  remonstrate  once  more  against 
the  Silver-Demonetizing  Act  of  1873.  ''Just  as  soon 
as  it  was  discovered,"  says  this  writer,  "  that  bimetal- 
lism was  abolished,  and  before  silver  had  fallen  in 
price,  Mr.  Bland,  the  humorist,  as  Mr.  White  is 
pleased  to  call  him,  attempted  to  restore  to  the  people 
a  right  that  had  been  unwittingly  taken  from  them." 
The  record  shows  that  neither  Mr.  Bland  nor  any- 
body else  attempted  to  remonetize  silver  until  after  it 
had  fallen  in  price  more  than  5d.  per  ounce.  When  the 
Act  of  1873  was  passed,  the  London  quotation  for  sil- 
ver was  59|d.  When  Mr.  Bland  introduced  his  bill 
(November,  1877),  the  quotation  was  54jd.  But  that 
is  not  very  important  now. 

The  assumption  that  "  the  people  "  had  "  a  right 
which  was  ''unwittingly  "  taken  from  them  embraces 
a  congeries  of  errors  which  need  to  be  exposed — all 
the  more  because  they  are  honestly  entertained.  In 


Tin-:  Gold  Standard. 


35 


the  first  place,  who  are  "  the  people  "  who  had  a  right 
that  was  unwittingly  taken  from  them?  Of  course, 
they  were  the  people  of  the  United  States.  How  do 
we  know  what  the  people  of  the  United  States  want 
at  any  particular  period  ?  By  their  action  in  Con- 
gress. There  is  no  other  way  by  which  their  wants 
can  be  ascertained.  Now,  what  do  we  find  as  to  this 
Act  of  1873  demonetizing  silver?  It  was  passed  by  a 
Congress  which  was  the  sole  organ  of  the  people  as 
to  such  matters — passed  by  a  vote  unanimous  in  one 
branch  and  nearly  unanimous  in  the  other. 

u  But  we  did  not  understand  it,"  says  somebody 
who  was  not  a  member  of  Congress.  It  was  not 
necessary  that  you  should  understand  it.  This  would 
be  a  queer  country  if  it  were  necessary  that  all  the 
people  should  understand  all  the  laws  before  they 
are  passed.  Neither  the  Constitution  nor  common 
sense  required  that  you  should  understand  it.  But 
neither  did  they  forbid  your  understanding  it  if  you 
had  wanted  to.  Your  understanding  it  would  not 
have  given  it  greater  validity  or  higher  equity.  Your 
not  understanding  it  took  nothing  from  its  validity  or 
its  equity.  The  frame  of  government  under  which 
you  live  prescribed  that  your  representative  in  Con- 
gress should  act  for  you.  It  did  not  even  require 
that  he  should  understand  it,  but  as  a  matter  of  fact 
he  did  understand  it,  because  it  was  explained  to  him 
by  public  officers  and  also  in  public  debate. 

If  wre  could  get  an  impartial  jury  from  another 
country  or  another  planet  to  try  this  question,  that 
jury  would  be  bound  to  decide  that  "  the  people 
passed  that  Act  of  1873  in  its  entirety,  in  the  only  way 
they  ever  pass  an  act  applicable  to  the  whole  Union. 
The  impartial  jury  would  probably  add  that  since 
the  people  had  had  twenty  years  in  which  to  rerao- 


36 


The  Gold  Standard. 


netize  silver,  and  had  not  done  so,  but  on  the  contrary 
had  voted  down  propositions  of  that  kind  four  times 
in  the  popular  branch  of  Congress,  the  evidence  was 
conclusive  that  they  were  not  misrepresented  bv  the 
Congress  which  passed  the  Act  of  1873.  They  voted 
down  the  remonetization  of  silver  on  the  21st  of  Feb- 
ruary, 1878,  when  they  substituted  the  Allison  Bill 
for  the  Bland  Bill  by  yeas  203,  nays  72.  They  voted 
it  down  on  the  8th  of  April,  1886,  on  Mr.  Bland's 
direct  motion  for  the  free  coinage  of  silver,  yeas  126, 
nays  163.  They  voted  it  down  on  the  19th  of  June, 
1890,  on  a  motion  to  concur  in  the  Senate  free-coinage 
bill,  yeas  135,  nays  152.  They  practically  voted  it 
down  on  the  24th  of  March,  1892,  by  voting  against 
a  parliamentary  motion  made  by  Mr.  Bland.  The 
majority  against  Mr.  Bland  was  only  two  votes  in 
this  case — 150  to  148 — but  it  was  sufficient  for  the 
purpose. 

But  we  are  told  that  "  a  right"  was  taken  away 
from  the  people  when  the  Act  of  1873  was  passed, 
and  the  implication  is  that  they  have  been 
vainly  struggling  to  recover  this  right  for  twenty 
years — a  very  odd  situation  indeed  for  a  country 
where  the  people  can  pass  any  law  that  they  really 
want.  It  is  the  fault  of  some  writers  that  they  use 
important  words  without  explaining,  perhaps  with- 
out knowing,  their  meaning.  What  is  this  "  right  " 
of  which  the  people  were  deprived  by  the  Act  of 
1873?  Rights  may  be  legal,  or  moral,  or  religious. 
In  which  category  does  this  right  fall?  If  it  was  a 
legal  right,  it  was  founded  upon  a  law  which  Con- 
gress had  the  same  right  to  repeal  as  to  enact.  It  is 
not  even  affirmed  that  this  was  a  valuable  right, 
although  that  is  implied.  A  man  may  have  a  legal 
right  to  two  wives,  but  it  may  be  an  injury  to  him. 


The  Gold  Standard. 


37 


He  may  have  a  legal  right  to  get  drunk,  but  that  can 
hardly  be  considered  valuable. 

Was  this  right  of  coinage,  of  which  the  people 
were  deprived,  a  moral  right?  Moral  rights  are 
matters  of  opinion  and  of  dispute,  but  it  may  be 
affirmed  with  confidence  that  the  existence  of  a 
moral  right  of  coinage,  in  the  sense  here  implied,  has 
never  been  affirmed  or  imagined  in  any  country  or 
age  since  the  world  began.  In  the  early  history  of 
California  coins  were  manufactured  by  private  parties 
and  put  in  circulation,  to  pass  for  what  they  were 
worth,  and  this  has  been  done  in  various  parts  of  the 
world  at  various  times.  Such  coins  had  no  legal- 
tender  property.  They  were  small  ingots  which  any- 
body could  accept  or  refuse,  according  to  his  liking. 
The  contention  here  is  that  a  moral  right  exists  for 
private  persons  to  make  412^  grains  of  silver  legal 
tender  for  a  dollar  in  the  absence  of  any  law  to  that 
effect  and  in  the  teeth  of  any  law  which  forbids  it. 
This  is  really  too  absurd  for  discussion — as  absurd  as 
it  would  be  to  claim  this  as  a  religious  right.  We 
may  add  that  if  this  is  a  moral  right,  it  belongs  to  all 
mankind,  seeing  that  they  have  all  had  silver  money 
at  one  time  or  another.  It  is  surprising  that  so  few 
recognize  it  as  a  right  or  set  up  any  claim  to  it. 

Finally  we  are  told  that  this  right  had  been  taken 
from  the  people  "  unwittingly."  We  repeat  that  ours 
would  be  a  very  queer  country  if  no  law  could  be 
passed  till  everybody  understood  it.  There  has 
been  a  great  deal  of  talk  in  the  newspapers  lately 
about  an  act  of  Congress  regulating  the  seal  fisheries 
in  Alaska.  How  many  people  knew  what  that  bill 
was  before  it  was  passed?  How  many  know 
what  it  is  now?  Even  the  lawyers  who  are 
discussing   it   before   the   Paris   Tribunal   do  not 


38 


The  Gold  Standard. 


agree  in  their  understanding  of  it.  Science  has  not 
yet  devised  any  means  to  compel  people  to  know 
what  is  going  on  in  Congress.  The  difficulties  of 
forcing  such  knowledge  upon  ten  or  twelve  millions 
of  voters,  large  numbers  of  whom  do  not  speak  Eng- 
lish or  read  and  write  any  language,  and  still  larger 
numbers  of  whom  know  nothing  of  finance,  and 
never  could  by  any  possibility  learn  anything  of  it, 
are  simply  appalling. 

Even  in  the  case  of  those  who  make  some  preten- 
sions to  scientific  attainment  an  attempt  to  make 
them  understand  the  bills  before  Congress  would  be 
quite  herculean.  Suppose  that  our  correspondent 
and  the  writer  of  this  article  were  brought  to  the  bar 
of  the  House  and  asked  whether  they  understood  the 
pending  measure,  so  that  it  might  not  be  passed 
"  unwittingly  "  as  to  themselves,  and  suppose  they 
should  apply  in  the  affirmative,  what  guarantee 
would  Congress  have  that  they  really  did  understand 
it?  They  might  think  that  they  understood  it  when 
they  did  not.  Something  of  this  kind  actually  hap- 
pened in  connection  with  the  Coinage  Act  of  1873. 
The  Hon.  William  D.  Kelley  of  Pennsylvania  took 
part  in  the  debate  on  the  clause  dropping  the  silver 
dollar  from  the  list  of  coins,  and  defended  that  clause 
on  the  ground  that  the  silver  dollar  was  worth  two 
cents  more  than  the  gold  dollar,  and  that  it  was  im- 
possible to  have  two  dollars  of  different  values.  He 
afterwards  said  that  he  did  not  understand  this  par- 
ticular part  of  the  bill. 

What  happened  in  Mr.  Kelley 's  case  would  be  still 
more  likely  to  happen  in  the  case  of  talesmen  hastily 
summoned  from  the  body  of  the  people  as  assistant 
Congressmen.  Our  forefathers,  anticipating  all  the 
difficulties  attendant  upon  the  endeavor  to  force  all 


The  Gold  Standard.  39 

the  people  to  understand  all  the  bills  before  Congress 
at  all  stages,  wisely  provided  that  such  antecedent 
knowledge  should  be  dispensed  with,  but  they  took 
steps  to  give  facilities  for  such  knowledge.  If  it  is  a 
defect  of  our  system  that  laws  are  passed  "  unwitt- 
ingly," it  is  a  defect  which  we  share  with  all  other 
governments,  and  it  seems  to  us  to  be  inherent  in  the 
representative  system.  At  all  events,  we  see  no 
present  cure  for  it. 

It  thus  appears  that  our  correspondent,  for  whom, 
as  we  have  said,  we  entertain  much  respect,  has,  in  a 
single  sentence,  used  three  phrases,  all  of  them  im- 
portant, and  carrying  with  them  the  gist  of  the  de- 
bate on  a  momentous  question,  without  any  clear 
idea  of  their  meaning.  He  has  used  the  word 
"  people  "  as  though  it  were  an  entity  separate  and 
distinct  from  the  only  organ  established  for  the  ex- 
pression of  its  will,  but  he  has  not  told  us  where  we 
can  find  this  entity  or  how  we  can  interrogate  it. 
He  affirms  that  the  people  have  been  deprived  of  a 
"  right"  without  telling  us  whether  it  is  a  legal  or  a 
moral  right,  or  how  it  came  to  exist,  or  what  portion 
of  the  civilized  world  regard  it  as  a  right,  or  how  we 
are  to  know  that  it  is  a  right,  or  anything  about  it. 
He  has  affirmed  that  the  people  were  deprived  of  this 
right  "  unwittingly,"  implying  that  no  law  ought  to 
be  passed  until  all  the  people  understand  it.  (It  is 
not  necessary,  according  to  the  hypothesis,  that  they 
should  approve  it,  but  only  that  they  should  under- 
stand it.)  In  using  these  phrases  in  this  way  he  has 
"  begged  the  question  "  completely,  but  we  presume 
that  he  was  not  aware  that  he  was  doing  so.  We  have 
taken  some  pains  to  point  out  his  unfounded  assump- 
tions because  we  know  that  he  represents  a  good 
many  people  who,  like  himself,  are  honestly  in  error. 


<3VL  I  02  3  | 
'  5 ox.  1(3" 


